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EU panel calls for fossil fuel subsidies cut by 2020

By Ed King

Environmentally harmful subsidies and tax-breaks must be slashed within the European Union if it is serious about developing a resource-efficient and climate-resilient economy by 2020.

That’s the recommendation of an EU ‘resource efficiency’ panel including the environment ministers of Germany, Italy, Denmark and Latvia, the head of the UN Environment Programme and the chief executives of Unilever, Kingfisher UK and Veolia Water.

The 33-strong panel released its manifesto for a Resource Efficient Europe yesterday. In addition to subsidies, it focuses on private investment, smart regulation, and better market conditions for durable and recyclable products.

A report released by UK think tank Chatham House last week warned that the EU’s five biggest economies, Germany France, Spain, UK and Italy are among the biggest resource importers in the world, and increasingly vulnerable to price fluctuations of fossil fuels, metals and food.

OECD statistics reveal Germany provided €7.4bn of fossil fuel subsidies in 2010, followed by the UK with €4.5bn, Spain and France with €2.6bn and Italy with €1.5bn. Campaigners argue these give oil and gas producers an unfair advantage over renewable energy and do not reward efficiency.

Panel member Professor Paul Ekins from University College London Energy Institute told RTCC that it was becoming an ‘economic imperative’ for the EU to become a more resource efficient region.

“It’s not something you can develop overnight. It requires sustained policy over a number of years, so if we wait until we’re actually the recipients of high, rising and volatile prices in a big way then we’ll have missed a trick,” he said.

“The idea should be to move towards resource security before you actually find yourself on the receiving end of unpleasant economic shocks so that you’re more resilient to them.”

The panel will issue a set of short term policy recommendations in June 2013.

Manifesto in full:

• Encouraging innovation and accelerating public and private investment in resource-efficient technologies, systems and skills, also in SMEs, through a dynamic and predictable political, economic and regulatory framework, a supportive financial system and sustainable growth enhancing resource-efficient priorities in public expenditure and procurement.

• Implementing, using and adopting smart regulation, standards and codes of conduct that a) create a level playing-field, b) reward front-runners and c) accelerate the transition, and d) take into account the social and international implications of our actions.

• Abolishing environmentally harmful subsidies and tax-breaks that waste public money on obsolete practices, taking care to address affordability for people whose incomes are hardest-pressed. Shifting the tax burden away from jobs to encourage resource-efficiency, and using taxes and charges to stimulate innovation and development of a job-rich, socially cohesive, resource-efficient and climate-resilient economy.

• Creating better market conditions for products and services that have lower impacts across their life-cycles, and that are durable, repairable and recyclable, progressively taking the worst performing products off the market; inspiring sustainable life-styles by informing and incentivising consumers, using the latest insights into behavioural economics and information technology, and encouraging sustainable sourcing, new business models and the use of waste as raw materials.

• Integrating current and future resource scarcities and vulnerabilities more coherently into wider policy areas, at national, European and global level, such as in the fields of transport, food, water and construction.

• Providing clear signals to all economic actors by adopting policy goals to achieve a resource-efficient economy and society by 2020, setting targets that give a clear direction and indicators to measure progress relating to the use of land, material, water and greenhouse gas emissions, as well as biodiversity. Such indicators must go beyond conventional measures of economic activity, help guide the decisions of all actors, and assist public authorities in timely action. All organisations above a meaningful size and impact must be held accountable to measure and report key non-financial progress indicators on a comparable basis.

RTCC VIDEO: David Turnbull from Oil Change International explains how subsidies distort global energy markets and encourage wasteful consumption.

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